This could be a timely reminder of how history can repeat itself! The October 1979 spike and subsequent consolidation are similar to current gold price action - especially the two lower lows in the condolidation, which have already been repeated this time around.
Does anyone know what might have triggered the sudden breakout on 29 November 1979? There was tension between the US and Iran and Pakistan during that November (similar to today), and the US Dollar reached its all-time record low against the Deutsche Mark on 3 December (in contrast to today).
More words: Cold war was in full swing, which some speculated could lead to World War III. This includes Russian involvement in Afghanistan out of nowhere, which shocked the West and further Russian military base expansions through Eastern Europe.
US embassy in Iran fell in November 1979 which created a hostage crisis, Hunt brothers cornered the Silver market only to comes very close to bankruptcy once the margin was hiked and eventually get bailed out by Paul Volcker himself.
Crude Oil spiked to insane heights at that time and the world had double digit inflation including devaluation of US Dollar (money printing). Latin American countries war eon the verge of default, including Mexico in a famous Petro Dollar Crisis.
In summary: the whole world was a total mess. Coming once again in a few years from now...
Yes, 80 was a total mess, and 82 was the beginning of the most powerful bull market ever know. Thanks to money printing. Just right now. In 2-3 years from now, we will have THE generational buying opportunity (maybe 2009 was) for stocks. Unfortunately, we must deal with high inflation at that moment. Fred
People call Gold and Silver a bubble. We are no where near a bubble territory. The chart above is a real bubble!
ReplyDeleteTiho,
ReplyDeleteThis could be a timely reminder of how history can repeat itself! The October 1979 spike and subsequent consolidation are similar to current gold price action - especially the two lower lows in the condolidation, which have already been repeated this time around.
Does anyone know what might have triggered the sudden breakout on 29 November 1979? There was tension between the US and Iran and Pakistan during that November (similar to today), and the US Dollar reached its all-time record low against the Deutsche Mark on 3 December (in contrast to today).
Mark
One word: War.
ReplyDeleteMore words: Cold war was in full swing, which some speculated could lead to World War III. This includes Russian involvement in Afghanistan out of nowhere, which shocked the West and further Russian military base expansions through Eastern Europe.
US embassy in Iran fell in November 1979 which created a hostage crisis, Hunt brothers cornered the Silver market only to comes very close to bankruptcy once the margin was hiked and eventually get bailed out by Paul Volcker himself.
Crude Oil spiked to insane heights at that time and the world had double digit inflation including devaluation of US Dollar (money printing). Latin American countries war eon the verge of default, including Mexico in a famous Petro Dollar Crisis.
In summary: the whole world was a total mess. Coming once again in a few years from now...
Yes, 80 was a total mess, and 82 was the beginning of the most powerful bull market ever know. Thanks to money printing. Just right now. In 2-3 years from now, we will have THE generational buying opportunity (maybe 2009 was) for stocks. Unfortunately, we must deal with high inflation at that moment.
ReplyDeleteFred
And some statistics on price rises between 1980 and 2010, for anyone who still thinks gold is currently in a bubble:
ReplyDeleteGold: +200%
New house: +370%
Gallon of petrol: +360%
Postage stamp: +300%
Dozen eggs: +350%
New car: +400%
Amount of US Government Debt: +1550%
Mark